If an employee’s position is eliminated for business purposes while they are on medical leave, can the employer simply terminate their employment without cause?
Question: If an employee’s position is eliminated for business purposes while they are on medical leave, can the employer simply terminate their employment without cause?
Answer: Employers are permitted to terminate an employee who is on medical leave without cause, but there are notable risks involved that can lead to significant and expensive litigation. While eliminating a position for business purposes is a completely valid reason to terminate employment, there is a chance that the employee will consider this termination to be related to their medical leave and take action in the form of a wrongful dismissal claim or a human rights complaint.
Should the employee pursue legal action, it will be up to the employer to demonstrate that the position was eliminated for business purposes alone. Employers should keep in mind that if even part of their decision to terminate the employee was based on the employee’s medical leave, that is sufficient to establish prima facie discrimination under the respective provincial or federal human rights legislation.
For example, employers should consider how they selected this employee for termination. Employers should ensure that all employees have the same opportunity to be retained. If the employer selected employees for retention based on who showed more initiative, took on more work, and demonstrated greater interest, they should be mindful of the employee on leave who may not have had the same opportunity to exhibit those attributes at the relevant time.
However, if the position is eliminated for business purposes entirely unrelated to the leave, there is no breach of the employee’s rights. For example, if an entire classification of employees is being abolished or an entire department is being closed permanently. In those circumstances, it is easier to justify terminating an employee’s employment while on medical leave.
In determining whether an employee on leave should be terminated, the following comments are likely to be of some assistance:
- Employers should clearly outline and vet the criteria by which they are selecting individuals for termination during a restructuring to ensure that it is objective and takes potential human rights implications into consideration.
- Employers should ensure that they carefully and accurately document their decision-making process when terminating an employee on leave as they may be called on to defend their actions in the future.
- Employers should ensure that the employee is paid the appropriate amount of payment in lieu of notice (statutory and/or contractual notice or common law, as applicable), or severance, as no working notice period can occur while the employee is on leave.
- Employers should also consider whether terminating an employee on medical leave will impact that employee’s benefits. If so, employers should seek out additional legal advice to assess the associated risk.
Ultimately, employers are entitled to reorganize their businesses and, pending no other motives, this supersedes the employee’s right to be reinstated after the conclusion of their leave. The two takeaway points are: (1) the termination should be entirely unrelated to the employee’s medical leave or disability; and (2) that employee should be paid the proper amount of pay in lieu of notice (statutory and/or contractual notice or common law, as applicable).
Tim Mitchell practises management-side labour and employment law at McLennan Ross in Calgary. He can be reached at (403) 303-1791 or [email protected]. This article was co-written with Michelle Tremblay, a Student-at-Law with McLennan Ross in Calgary.
